In February 2012, after many months of negotiation, 49 state attorneys general and the federal government reached agreement on a settlement with the country’s five largest loan servicers:
This bipartisan settlement has provided hundreds of millions of dollars for New York State, including:
- $1.8 billion in relief to distressed borrowers, including $1.2 billion in principal reductions on 1st and 2nd mortgages and mortgage refinances that lower interest rates on their loans;
- Direct payments of more than $130 million for New York, that can be used to fund legal services and housing counseling for borrowers facing foreclosure so that no New Yorker has to go through the foreclosure process without an attorney.
The agreement settles state and federal investigations finding that the country’s five largest loan servicers routinely signed foreclosure related documents outside the presence of a notary public and without really knowing whether the facts they contained were correct. Both of these practices violate the law. The settlement provides benefits to borrowers in New York and other states whose loans are owned by the settling banks as well as to many of the borrowers whose loans they service.